1. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-1

2. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-2 Chapter 17 Motivation, Compensation, Leadership, and Evaluation of Salespeople

3. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-3 Chapter 17 Motivation of the Sales Force The Motivation Mix: Choose Your Ingredients Carefully Compensation Is More Than Money The Total Compensation Package Nonfinancial Rewards Are Many

4. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-4 Chapter 17 Leadership Is Important to Success Performance Evaluations Let People Know Where They Stand Sales Managers Use Technology

5. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-5 Motivation of the Sales Force Motivating salespeople at two levels Motivation of the individual salesperson Motivation of the entire sales force Motivation is the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period

6. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-6 The Motivation Mix: Choose Your Ingredients Carefully The basic compensation plan Special financial incentives Nonfinancial rewards Leadership techniques Management control procedures

7. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-7 Compensation Is More Than Money Sales performance can be rewarded in three fundamental ways Direct financial rewards Career advancement Nonfinancial compensation Although a sales reward system is not the only means of motivating salespeople, it is the most important

8. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-8 Compensation Is More Than Money cont… Three basic plans of financial compensation Straight salary plan Advantages to the salesperson Advantages to management Disadvantages to the straight salary plan When to use the straight salary plan

9. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-9 Compensation Is More Than Money cont… Straight commission plans Two basic types Straight commission Draw against commission Three basic elements Pay is related directly to a performance A percentage rate of commission is attached to the unit A level at which commissions begin or change is established

10. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-10 Compensation Is More Than Money cont… Drawing accounts Advantages of straight commission plans Disadvantages of the commission plan Administrative problems with the commission plan Combination plans Salary and commission Salary and bonus: individual bonus or group bonus Salary, commission, and bonus: individual bonus or group bonus

11. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-11 Compensation Is More Than Money cont… Bonus: individual or group Across-the-board bonus Performance bonus Sales contests

12. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-12 The Total Compensation Package People choose a sales career for both nonfinancial and financial reasons The salesperson receives numerous forms of nonfinancial compensation

13. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-13 Nonfinancial Rewards Are Many Achievement or recognition awards Transfer to larger, more challenging sales territories or promoted to key account managers Sales manager’s praise

14. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-14 Leadership Is Important to Success Leadership The leader’s task and relationship behavior Task behavior involves the leader in describing the duties and responsibilities of an individual or group Relationship behavior is people-oriented

15. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-15 Leadership Is Important to Success cont… Leadership styles Style 1—tells Style 2—persuades Style 3—participates Style 4—delegates Choosing a leadership style On-the-job coaching Coaching Main element is the joint sales call

16. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-16 Performance Evaluations Let People Know Where They Stand Management control system Performance evaluation—what is it? Reasons for performance evaluation Who should evaluate salespeople? When should salespeople be evaluated? Performance criteria Quantitative performance criteria Qualitative performance criteria Conducting the evaluation session

17. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-17 Performance Evaluations Let People Know Where They Stand cont… Conducting the evaluation session Both manager and salesperson should be prepared for the interview Be positive Actually review performance Finalize the performance evaluation Summarize the total performance evaluation Develop mutually agreed-on objectives Formalize evaluation and objectives

18. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-18 Sales Managers Use Technology To manage customers To manage salespeople

19. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-19 Summary of Major Selling Issues An important challenge of the sales manager is to motivate salespeople using financial and nonfinancial methods Most firms today use a combination of salary and financial incentives rather than straight salary or straight commission plans The sales manager needs to understand the principles of leadership and apply them to salespeople based on their individual personalities and territorial situations

20. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-20 Summary of Major Selling Issues cont… The performance of sales personnel is evaluated by comparing their quotas and objectives to actual sales and job activities to determine their success To effectively evaluate salespeople, managers should develop procedures to ensure fair treatment